CHARACTERISTICS AND SYNCHRONISATION OF REAL BUSINESS CYCLES IN SELECTED SUB-SAHARAN AFRICAN COUNTRIES

The 2007/2008 global financial crisis and the 2016/2017 economic recession experienced in Nigeria, highlights the need for an extensive business cycle fluctuation research. This study examines business cycle fluctuations in selected Sub-Saharan African (SSA) countries with three major objectives namely, to: establish and characterise business cycles in SSA; observe if a form of business cycle synchronisation exists across SSA countries; measure the impact of some selected real shocks in SSA. To achieve the first objective, the Hodrick-Prescott filter was utilised to establish the existence of business cycles in SSA as well as the cyclical characteristics. The results indicate that business cycles exist in SSA. The cyclical characteristics are also described using the Hodrick- Prescott filter. The pair-wise correlation matrix was utilised in investigating the existence of business cycle synchronisation in SSA. It is discovered that business cycle synchronisation exists in SSA; the degree of synchronization, however, varies across different countries. The impact of some selected real shocks in SSA was measured using a Bayesian Panel Vector Autoregression model. It was ascertained from the results that real shocks indeed drive business cycles in SSA. The existence of strong procyclicality between Government spending and Real GDP, indicates the strong influence of government spending on macroeconomic fluctuations. Therefore, the study recommends that government and its institutions should carry out a proper fiscal policy plan alongside monetary policy in order to stabilise the economy in recessions and expansions. Furthermore, the study highlights the need for diversification of the export base of most SSA countries from agricultural raw materials to consumer goods